Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
After the euphoria of late Wednesday when it became apparent that Ben Bernanke will not be taking back any QE during 2013, and likely through the end of his term, markets were as overbought on some measures as they had been the entire year. The NYSE McClellan Oscillator was at levels seen only a handful of times the past 3 years. The S&P 500 had been up every single day of the month except for one – so in a way it was a bit of a blow off short term top based on surprising news. There was a small pullback Thursday and the largest pullback of the month Friday. But within the context of the move preceding it this was not a shock to the system.
With the S&P 500 we essentially had a breakout over early August highs mid week, and then a retrace to them late in the week. The MACD indicator is still in fine condition and some digestion here would be healthy.
Sector wise there was not that much rhyme or reason last week. Some of the yield specific sectors rallied sharply Wednesday on the surprise move by the Fed, but then gave back much of those gains (if not all) the next 2 days.
Treasury yields on the 10 year, which had approached 3%, have fallen back in the 2.7%s which helps take some pressure off the housing market – which seems to be Ben’s top concern.
With German elections over the weekend more or less going as expected and the Fed out of the way, the main concern near term will be the debt ceiling issue. Of course we have been trained now for the politicians to posture and make lots of comments but eventually cave in. So it will be interesting how serious the market takes it this time around when we see this stuff on an annual basis.
Economic data this week is centered on housing and consumer confidence, not the type of things that usually are market shaking.  Next week we will return to the big econ data (ISMs, and employment) and earnings season will also begin
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